Zeltiq Aesthetics, Inc. v. Sun Serenity Spa et al
Filing
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Findings and Recommendations recommending granting Plaintiff's 13 Motion for Default Judgment, signed by Magistrate Judge Sandra M. Snyder on 12/17/2015. Motion referred to Judge Drodz. Objections to F&R due by 1/22/2016. (Rosales, O)
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UNITED STATES DISTRICT COURT
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EASTERN DISTRICT OF CALIFORNIA
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ZELTIQ AESTHETICS, INC.,
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Plaintiff,
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v.
CASE NO. 1:15-CV-1204-DAD-SMS
FINDINGS AND RECOMMENDATIONS
RECOMMENDING GRANTING
PLAINTIFF’S MOTION FOR DEFAULT
JUDGMENT
SUN SERENITY SPA; JACQUIE PEREZ,
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Defendants.
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Plaintiff Zeltiq Aesthetics, Inc. brings this suit against Sun Serenity Spa and Jacquie Perez
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(“Defendants”) for trademark infringement, false advertising, and unfair competition under 15
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U.S.C. §§ 1051 et seq. (the “Lanham Act”), and unfair competition under California law. Having
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been duly served, neither defendant has entered an appearance in this action. Plaintiff moves for
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default judgment, a permanent injunction, and attorney’s fees.
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I.
BACKGROUND
Plaintiff’s complaint alleges that it is the exclusive licensee of the Cryoliposis process,
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which is a patented body-contouring procedure involving freezing fat cells without damage to the
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skin. Doc. 1 ¶ 8. Plaintiff is the only party in the U.S. to have obtained FDA clearance to offer a
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Cryoliposis device. Doc. 1 ¶ 13. Plaintiff markets its Cryoliposis device and system under the
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registered trademarks Zeltiq® and CoolSculpting®, which it distributes to medical professionals
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who receive training on proper use of the device in compliance with FDA clearance. Doc. 1 ¶ 14.
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Plaintiff’s CoolSculpting system has received national press coverage, including features on
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television shows including The Dr. Oz Show. Doc. 1 ¶ 16.
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Plaintiff alleges that defendant Sun Serenity Spa is an unincorporated business in
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Patterson, California owned by defendant Jacquie Perez. Doc. 1 ¶¶ 3-4. Defendants advertise and
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perform body-contouring services using cooling technology using a device that is not an
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authorized CoolSculpting device. Doc. 1 ¶ 20. Defendants falsely identified these services as
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“CoolSculpting” and “FDA approved.” Doc. 1 ¶ 21. Defendants maintained a website that
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included a video clip of Plaintiff’s CoolSculpting procedure from The Dr. Oz Show. Doc. 1 ¶ 22.
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A screenshot of Defendant’s website at that time placed the video clip under the heading “Lipo-
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Freeze / ColdSculpting [sic].” Doc. 1, Exh. B.
Plaintiff learned of Defendants’ conduct, and sent a letter to Defendants advising them of
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its position and seeking discontinuation of Defendant’s unlawful actions. Doc. 1 ¶ 23. Defendants
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continued to offer the cooling service but began to advertise the service as “Lipo Freeze.” 25.
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Defendants did not remove the video clip showing Plaintiff’s CoolSculpting procedure. Doc. 1 ¶
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26. A screenshot of Defendant’s website places the video clip under the heading “Lipo-Freeze.”
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Use of the Lipo Freeze device has not been cleared by the FDA. Doc. 1, Exh. D.
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Plaintiff filed the complaint in this action on July 30, 2015. Doc. 1. Summonses were
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returned executed as to both defendants with answers due on September 1, 2015. Doc. 6. No
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answer or appearance was filed or has been filed to date. Plaintiff requested entry of default as to
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both defendants on September 22, 2015, which was entered by the clerk. Docs. 7-9.
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II.
DEFAULT JUDGMENT
Entry of default judgment is governed by Federal Rule of Civil Procedure 55, which allows
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the court to enter default judgment against a defendant who has failed to plead in an action. Fed.
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R. Civ. P. 55(a)-(b). The Ninth Circuit has provided seven factors for consideration by the district
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court to determine whether to enter a default judgment, known as the Eitel factors. They are: (1)
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the possibility of prejudice to the plaintiff; (2) the merits of plaintiff’s substantive claim; (3) the
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sufficiency of the complaint; (4) the sum of money at stake in the action; (5) the possibility of
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dispute concerning material facts; (6) whether default was due to excusable neglect and; (7) the
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strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits.
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Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). “‘The general rule of law is that upon
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default the factual allegations of the complaint, except those relating to the amount of damages,
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will be taken as true.’” TeleVideo Systems, Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir.
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1987) (quoting Geddes v. United Financial Group, 559 F.2d 557, 560 (9th Cir. 1977)).
Here, Plaintiff’s substantive claims, which will be more thoroughly discussed below, have
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substantial merit and are adequately pled in the complaint. Plaintiff does not seek money damages.
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Plaintiff’s attached documents make it unlikely that there will be a dispute concerning the material
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facts. Defendants have not appeared in this action, and there is no evidence that the default was
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due to excusable neglect. Plaintiff will not be able to obtain relief without default judgment.
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Hence, the balance of the Eitel factors, supported by the following discussion on the merits,
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supports a finding that default judgment is proper.
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A. Trademark Infringement
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Plaintiff alleges that Defendants infringed on its trademark by using the CoolSculpting
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mark in Defendants’ advertising materials, including on their website.1 A defendant is liable for
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trademark infringement when it uses, without the consent of the registrant, any reproduction,
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counterfeit, copy, or colorable imitation of a registered mark in connection with the sale of goods
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or services which is likely to cause confusion. 15 U.S.C. § 1114(1). To prevail on a claim of
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trademark infringement under the Lanham Act, a party must prove that it has “a protectable
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ownership interest in the mark” and “that the defendant’s use of the mark is likely to cause
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consumer confusion.” Dep't of Parks & Recreation v. Bazaar Del Mundo Inc., 448 F.3d 1118,
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1124 (9th Cir. 2006).
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1. Mootness
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Upon receiving a letter from Plaintiff, Defendants voluntarily ceased using the
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CoolSculpting mark in their marketing materials. They continued to use the mark by hosting a
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video demonstrating Plaintiff’s procedure with “CoolSculpting” in the title. At this time, it is not
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certain whether the website is still active or whether the video is still viewable on the website.
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Plaintiff’s allegations that Defendants made the false statement that Defendants’ body sculpting service using
cooling technology was FDA approved does not raise a trademark or trade name claim under the Lanham Act.
Plaintiff’s allegations that Defendants’ body sculpting service was unlawful or dangerous also do not raise a claim
under the Lanham Act.
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However, “a defendant’s voluntary cessation of a challenged practice does not deprive a federal
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court of its power to determine the legality of the practice.” City of Mesquite v. Aladdin's Castle,
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455 U.S. 283, 289 (1982). “Otherwise a defendant could engage in unlawful conduct, stop when
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sued to have the case declared moot, then pick up where he left off, repeating this cycle until he
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achieves all his unlawful ends.” Already, LLC v. Nike, Inc., 133 S. Ct. 721, 726 (2013). A
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defendant’s voluntary compliance moots a case when it shows “that it is absolutely clear the
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allegedly wrongful behavior could not reasonably be expected to recur.” Id. (quoting Friends of
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the Earth, Inc. v. Laidlaw Environmental Services (TOC), Inc., 528 U. S. 167, 190 (2000)). Here,
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Defendants have not appeared in the action, and it cannot be absolutely clear that the unpermitted
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use of the mark could not be reasonably expected to recur. Defendants’ ceasing to use the
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CoolSculpting mark does not moot this case.
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2. Likelihood of Confusion
Plaintiff has demonstrated that it holds the CoolSculpting mark and that Defendants used
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the mark without Plaintiff’s consent in their marketing materials and on their website in
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connection with the sale of their body-sculpting procedure using cooling technology. It also
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sufficiently demonstrates that Defendants’ use of the mark is likely to cause customer confusion.
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The “core element of trademark infringement” is whether the defendant's conduct “is likely
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to confuse customers about the source of the products.” E. & J. Gallo Winery v. Gallo Cattle Co.,
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967 F.2d 1280, 1290 (9th Cir. 1992). “The test for likelihood of confusion is whether a
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‘reasonably prudent consumer’ in the marketplace is likely to be confused as to the origin of the
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good or service bearing one of the marks.” Dreamwerks Prod. Grp. v. SKG Studio, 142 F.3d 1127,
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1129 (9th Cir. 1998)(citation omitted).
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The Ninth Circuit has identified and expounded on eight factors in determining whether
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confusion between related goods likely: “(1) strength of the mark; (2) proximity of the goods; (3)
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similarity of the marks; (4) evidence of actual confusion; (5) marketing channels used; (6) type of
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goods and the degree of care likely to be exercised by the purchaser; (7) defendant’s intent in
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selecting the mark; and (8) likelihood of expansion of the product lines.” AMF, Inc. v. Sleekcraft
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Boats, 599 F.2d 341, 348-49 (9th Cir. 1979). These factors, known as the Sleekcraft factors, are
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“non-exhaustive, and […] should be applied flexibly, particularly in the context of Internet
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commerce.” Network Automation, Inc. v. Advanced Sys. Concepts, 638 F.3d 1137, 1149 (9th Cir.
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2011). Even if the confusion is dispelled before an actual sale occurs, the “initial interest”
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confusion that creates initial interest in a competitor’s product “impermissibly capitalizes on the
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goodwill associated with a mark and is therefore actionable trademark infringement.” Playboy
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Enters. v. Netscape Communs. Corp., 354 F.3d 1020, 1025 (9th Cir. 2004).
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Here, Plaintiff’s mark is strong. It is somewhat descriptive and somewhat fanciful: a
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“suggestive” mark which is protected without proof of secondary meaning. See Zobmondo Entm't,
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LLC v. Falls Media, LLC, 602 F.3d 1108 (9th Cir. 2010). Plaintiff has also strengthened its mark
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by advertising, and it has gained some amount of public recognition. Plaintiff and Defendant
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purport to offer the same service –body sculpting using cooling technology. Defendants used
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Plaintiff’s registered mark in their marketing materials and their website. Defendants market their
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service to the same audience as Plaintiff, although Defendants’ audience is most likely limited to
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those who might access their services in their geographic area. Defendants’ are likely to have been
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aware that their service was not CoolSculpting when they offered CoolSculpting in their
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marketing materials, and that the CoolSculpting procedure shown on their website was not the
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same service offered at their facility. It appears that they posted the CoolSculpting demonstration
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video to their website in order to demonstrate what was entailed in their “Lipo-Freeze” procedure.
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There is no evidence of actual confusion between Plaintiff’s service and Defendants’ and no
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evidence has been presented of the degree of care likely to be exercised by the purchaser. Overall,
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it appears that there is a likelihood of confusion associating Plaintiff’s mark with Defendants’
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service. It is highly likely that a reasonably prudent consumer would see Defendants’ advertising
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or website and believe that Defendants offered Plaintiff’s CoolSculpting procedure. Plaintiff has
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demonstrated that its trademark infringement claim has substantial merit.
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B. False Advertising and False Designation of Origin
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The Lanham Act also prohibits the use of any “word, term, name, symbol, or device” in
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commerce in connection with any goods or service which, “in commercial advertising or
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promotion, misrepresents the nature, characteristics, qualities, or geographic origin” of its goods
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or services. 15 U.S.C. § 1125(a)(1)(B). In order to state a claim for false advertising under the
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Lanham Act (15 U.S.C. § 1125(a)(1)(B)), a plaintiff must allege “(1) a false statement of fact by
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the defendant in a commercial advertisement about its own or another's product; (2) the statement
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actually deceived or has the tendency to deceive a substantial segment of its audience; (3) the
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deception is material, in that it is likely to influence the purchasing decision; (4) the defendant
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caused its false statement to enter interstate commerce; and (5) the plaintiff has been or is likely to
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be injured as a result of the false statement, either by direct diversion of sales from itself to
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defendant or by a lessening of the goodwill associated with its products.” Southland Sod Farms v.
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Stover Seed Co., 108 F.3d 1134, 1139 (9th Cir. 1997)(internal citations omitted).
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As discussed above, Defendants made the false statement that they offered CoolSculpting
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through their marketing materials and falsely implied that their service was the same as Plaintiff’s
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CoolSculpting procedure. This statement tended to deceive Defendants’ audience and would likely
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injure Plaintiff by lost customers and a lessening of the goodwill associated with its products.
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Plaintiff asserts that it has received complaints from users of competing body-sculpting procedures
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using cooling technology that has physically harmed them, thereby reducing Plaintiff’s goodwill.
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Plaintiff has demonstrated that its 15 U.S.C. § 1125(a)(1)(B) claim has substantial merit.
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C. Federal Unfair Competition
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The Lanham Act also prohibits any person from using any “word, term, name, symbol, or
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device” in commerce in connection with any goods or service which, “is likely to cause confusion
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[…] as to the affiliation, connection, or association of such person with another person, or as to the
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origin, sponsorship, or approval” of its goods or services by another person. 15 U.S.C. §
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1125(a)(1)(A).
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For the same reasons discussed above, Plaintiff has demonstrated that its 15 U.S.C. §
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1125(a)(1)(A) claim has substantial merit.
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D. California Unfair Competition
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California’s unfair competition law prohibits, and provides civil remedies for, unfair
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competition, which it defines as “any unlawful, unfair or fraudulent business act or practice.” Cal.
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Bus. & Prof. Code § 17200; Kwikset Corp. v. Superior Court, 51 Cal. 4th 310, 320 (2011). “The
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Legislature intended this sweeping language to include anything that can properly be called a
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business practice and that at the same time is forbidden by law.” Bank of the West v. Superior
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Court, 2 Cal.4th 1254, 1266 (1992)(internal quotations and citations omitted). “[S]tate common
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law claims of unfair competition and actions pursuant to California Business and Professions Code
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§ 17200 are substantially congruent to claims made under the Lanham Act.” Seltzer v. Green Day,
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Inc., 725 F.3d 1170, 1180 n.1 (9th Cir. 2013)(internal quotations omitted).
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Plaintiff’s California unfair competition claim is brought exclusively on the basis of its
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Lanham Act claims. Hence, because the Plaintiff’s Lanham Act claims have substantial merit,
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Plaintiff’s California unfair competition claim also has substantial merit.
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III.
PERMANENT INJUNCTION
Plaintiff requests a permanent injunction enjoining Defendants from 1) using the
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CoolSculpting, or Plaintiff’s other marks in connection with the sale of Defendants’ goods or
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services; 2) making any statement that are likely to lead members of the public to believe that
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devices owned or services performed by Defendants are associated with Zeltiq; 3) providing
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services that are the clinical equivalent of any goods or services offered by Zeltiq; 4) displaying
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any text, graphic, or other materials owned by or emanating from Zeltiq or its authorized providers
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concerning Cryoliposis and the results therefrom; and 5) taking any action likely to cause public
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confusion as to the connection, affiliation, sponsorship, approval, or other association of
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Defendants’ goods or services with Zeltiq and its goods or services. Plaintiff also requests an order
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requiring Defendants to surrender their Lipo Freeze device.
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The Lanham Act gives the court “power to grant injunctions, according to the principles of
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equity and upon such terms as the court may deem reasonable, to prevent the violation of any right
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of the registrant of a mark registered in the Patent and Trademark Office or to prevent a violation
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under [the Lanham Act].” 15 U.S.C. § 1116(a). An injunction following a determination of a
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trademark infringement is not automatic and is subject to the principles of equity. Herb Reed
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Enters., LLC v. Fla. Entm't Mgmt., 736 F.3d 1239, 1249 (9th Cir. 2013). A plaintiff seeking a
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permanent injunction “must demonstrate: (1) that it has suffered an irreparable injury; (2) that
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remedies available at law, such as monetary damages, are inadequate to compensate for that
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injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy
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in equity is warranted; and (4) that the public interest would not be disserved by a permanent
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injunction.” eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006).
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To obtain a permanent injunction in a trademark infringement action, actual irreparable
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harm must be demonstrated. Herb Reed, 736 F. 3d at 1249. A finding of irreparable harm is not
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presumed upon a finding of trademark infringement, but must be grounded in evidence. Id.
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“Evidence of loss of control over business reputation and damage to goodwill could constitute
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irreparable harm.” Id. at 1250. However, “platitudes” and the possibility of harm are insufficient to
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demonstrate actual irreparable harm. Id. Also, evidence of customer confusion is not evidence of
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irreparable harm. Id.; San Miguel Pure Foods Co. v. Ramar Int'l Corp., 2015 U.S. App. LEXIS
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15145, *10-11 (9th Cir. Cal. Aug. 27, 2015).
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Here, Plaintiff has not demonstrated actual irreparable harm. Plaintiff’s attached
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declaration by Plaintiff’s Senior Director of Clinical and Medical Affairs states that Plaintiff
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“often gets complaints from patients who have been injured by treatments administered by
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individuals not trained or authorized by Zeltiq, using unapproved, non-Zeltiq devices, but who
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nonetheless claim to be providing ‘CoolSculpting’ treatments.” Doc. 13, Exh. 3 at 2:22-25. She
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states that the advertising and distribution of these knock-off devices is “likely to cause harm” to
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Plaintiff in the form of harm to its reputation. Id. at 3:2-14. Plaintiff argues in its motion, based on
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the attached declaration, that Defendants’ conduct “creates a significant risk of irreparable harm to
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Zeltiq’s reputation and goodwill associated with its brand.” This evidence does not support a
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finding of actual irreparable harm. Plaintiff has not submitted evidence that Defendants’ use of its
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mark have caused Plaintiff to suffer actual harm. Plaintiff merely speculates that Defendants’
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unauthorized use of their mark may harm its reputation because other unauthorized devices
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unlawfully using Plaintiff’s mark have physically harmed consumers and caused them to
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complain. Plaintiff’s harm allegations are not grounded in evidence. Without a showing of actual
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irreparable harm, a permanent injunction enjoining Defendants from using Plaintiff’s marks is not
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appropriate.
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Further, Plaintiff requests as part of the injunction that Defendants be required to surrender
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the device to an unspecified party “in order to ensure that Defendants do not dispose of the
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accused device to a third party who may not be subject to the Court’s injunction, who may initiate
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similar misconduct by advertising and administering services using this knock-off device that is
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not clinically proven, not FDA cleared, and does not perform treatments that are the clinical
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equivalent of Zeltiq’s CoolSculpting device.” Doc. 13 at 16:16-21. This request is sufficiently
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overbroad and not within the scope of this action. Plaintiff has brought an action for trademark
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infringement and has presented no evidence or allegations that the device itself is infringing on
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Plaintiff’s trademark. Defendants’ alleged use of a medical device not cleared by the FDA does
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not raise a trademark issue. Plaintiff simply does not want Defendants or a hypothetical third party
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to offer a competing service. This request is inappropriate and beyond the scope of this action.
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Similarly, Plaintiff’s request to enjoin Defendants from performing services that are the clinical
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equivalent of any services offered by Plaintiff is beyond the scope of this action.
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IV.
Plaintiff seeks $14,930 in attorney’s fees, arguing that the willfulness of Defendants’
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ATTORNEY’S FEES
actions warrants an award of reasonable attorney’s fees.
An award of reasonable attorneys’ fees and costs is expressly provided for in “exceptional
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cases” of trademark infringement. 15 U.S.C. § 1117(a); see also Fed. R. Civ. P. 54(d). “A case is
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considered exceptional when the infringement is malicious, fraudulent, deliberate, or willful.”
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Fifty-Six Hope Rd. Music, Ltd. v. A.V.E.L.A., Inc., 778 F.3d 1059, 1078 (9th Cir. 2015)(internal
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quotations omitted). Egregious conduct and bad faith are not required. Id. “We consider the relief
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obtained, […] and whether the relevant area of law was unclear when the defendant’s conduct
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occurred.” Id. (internal citations omitted). A finding that a case is exceptional does not require the
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district court to award attorneys’ fees –“in an exceptional case, the district court ‘may’ (or may
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not) award fees.” Id. at 1079. “The ‘Senate Report expressly commends this decision to the
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discretion of the [trial] court.’” E.&J. Gallo Winery v. Proximo Spirits, Inc., 583 Fed. Appx. 632,
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636 (9th Cir. 2014)(citing Polo Fashions, Inc. v. Dick Bruhn, Inc., 793 F.2d 1132, 1134 (9th Cir.
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1986)).
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“[T]he court may take plaintiffs’ failure to recover damages into account when exercising
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its discretion to award fees.” TrafficSchool.com, Inc. v. Edriver Inc., 653 F.3d 820, 832 (9th Cir.
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2011). The court must also consider whether the plaintiff obtained a judgment and an injunction
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that ameliorate a serious public harm, and weigh the unlawfulness of the defendant’s conduct. Id.
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Defendants were on notice of their unlawful activity, including the use of the
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CoolSculpting video, and they likely knew that they were not authorized by Plaintiff to use the
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CoolSculpting mark in their promotional materials. Therefore, this case is “exceptional.”
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However, an award of fees is not automatic. Here, there is no evidence of actual harm to Plaintiff
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or profit to Defendants. Plaintiff has not requested monetary damages, and the injunction
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enjoining Defendants from using Plaintiff’s mark does not ameliorate a “serious public harm.”
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Defendants also attempted to comply with Plaintiff’s request to discontinue using its mark by
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removing it from their marketing materials. Hence, Plaintiff’s request for attorney’s fees should
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be denied.
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V.
RECOMMENDATION
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For the foregoing reasons, it is hereby RECOMMENDED as follows:
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1. Plaintiff’s motion for default judgment be GRANTED against Defendant Sun Serenity
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Spa and Defendant Jacquie Perez, with joint and several liability, for violations of 15
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U.S.C. § 1114, 15 U.S.C. § 1125(a)(1)(B), 15 U.S.C. § 1125(a)(1)(A), and California
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Business and Professions Code § 17200;
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2. Plaintiff’s request for a permanent injunction be DENIED;
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3. Plaintiff’s request for attorney’s fees be DENIED.
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These findings and recommendations are submitted to the United States District Court
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Judge assigned to this case, pursuant to the provisions of 28 U.S.C. § 636(b)(1)(B) and Rule 72-
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304 of the Local Rules of Practice for the United States District Court, Eastern District of
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California. Within thirty (30) days after being served with a copy, Petitioner may file written
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objections with the Court, serving a copy on all parties. Such a document should be captioned
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“Objections to Magistrate Judge’s Findings and Recommendations.” The Court will then review
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the Magistrate Judge’s ruling pursuant to 28 U.S.C. § 636(b)(1)(C). The parties are advised that
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failure to file objections within the specified time may waive the right to appeal the District
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Court’s order. Martinez v. Ylst, 951 F.2d 1153 (9th Cir. 1991).
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IT IS SO ORDERED.
Dated:
December 17, 2015
/s/ Sandra M. Snyder
UNITED STATES MAGISTRATE JUDGE
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